Bill Cara: Discussing money flow, Thurs., Jan. 11, 2007, 1:53 PM

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January 11, 2007

Discussing money flow, Thurs., Jan. 11, 2007, 1:53 PM

When asked by the TV anchor today what he thought of the oil and gas sector, the investment manager replied: "We think it is a bit problematic for responsible investors." Hahaha. The price of Crude Light just hit a 19 month low, and already analysts are talking 40, 30, 20 for $WTIC.

My barber said to me this week (I've quoted him saying the same line before):

"I don't listen to these analysts on TV. If a stock goes up, they say Buy. If it goes down, they say Sell."

Somebody asked me about Money Flow.

StockCharts has an explanation for two such indicators.

Chaikin Money Flow is one.

Granville's On Balance Volume is another.

I use these indicators for decision support, but not in the way StockCharts.com implies. I use a trend line violation technique.

From the Wall St. Journal Market Data & Tools (subscription may be required), there is a Money Flow link under U.S. stock highlights

Wall St. Journal: Money Flow "- Selling on Strength

Wall St. Journal: Money Flow -- Buying on Weakness

I look at the WSJ screen to see if there are groups of stocks under accumulation or distribution. This is not a specific decision support tool, but it does give me an idea of whether the big capital funds are buying or selling groups.

As indicated off the top, when money flow becomes obvious to everybody, it is usually too late to profit from the knowledge.

Posted by Posted by Bill Cara on January 11, 2007 01:53:57 PM | Category: Trader Tools

Discourse

Thanks Bill. This really helps.

How reliable is this indicator ? How long does a sector or stock need to show negative money flow before the price starts declining ( and vice versa - positive MF to see price rise) ?

Posted by: TheAdonis at January 11, 2007 3:28 PM [link]

The WSJ did a uber terrific job in launching their data center.

Posted by: Leisa at January 11, 2007 3:29 PM [link]

SMH has a shooting star and USD has a hanging man.
Now that CNBC has herded everybody out of commodities lol.
More weak earnings like SAP coming?

Posted by: DollarBill at January 11, 2007 4:45 PM [link]

Colin Twiggs created a great money flow indicator which is similar to the Chalkin m/f but adjusts for gaps. Works well for volatile securities. It is easy to program in most software, if not already available.

More info:
http://www.incrediblecharts.com/technical/twiggs_money_flow.htm

Andy

Posted by: Andy at January 11, 2007 5:41 PM [link]

I don't trust guv numbers on jobs , inflation
or anything....but one thing guv can't control
are earnings reports. Thats reality.

Samsung's Fourth-Quarter Profit Falls 8.5% to 2.35 Trillion

By Kevin Cho

Jan. 12 (Bloomberg) -- Samsung Electronics Co., Asia's biggest maker of chips, mobile phones and flat screens, reported fourth-quarter profit fell after the company cut prices of panels and semiconductors used in consumer electronics.

Net income declined 8.5 percent to 2.35 trillion won ($2.5 billion), from 2.56 trillion won a year earlier, the Suwon, Seoul- based company said in a regulatory filing today. Operating profit fell 3.9 percent to 2.05 trillion won, while sales rose 1.1 percent to 15.69 trillion won.

Chief Executive Officer Yun Jong Yong is struggling with increased competition from Nokia Oyj and Motorola Inc. for mobile- phone sales, as well as a glut of chips and liquid-crystal displays. Samsung shares, which had their biggest drop since 2000 last year, have extended their decline in 2007 on concern that lower prices may undermine profit growth during the first half.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aHoyr6_h8O5c&refer=worldwide

Posted by: DollarBill at January 11, 2007 8:28 PM [link]

January 11, 2007

Discussing money flow, Thurs., Jan. 11, 2007, 1:53 PM

Discourse

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